Bankrupt Revstone sues former chairman, seeking to recover $12.9M

Bankrupt supplier Revstone Industries LLC is suing its former chairman, George Hofmeister, in an attempt to recover more than $12.9 million.

The suit, filed Monday in U.S. Bankruptcy Court in Wilmington, Del., alleges that Hofmeister transferred the funds away from the Southfield-based auto supplier to pay down personal and non-related business debts, according to court records and a report by Dow Jones.

Revstone Industries, which is currently under Chapter 11 bankruptcy protection, lays out 22 claims of fraud, including a $3.95 million transfer from Revstone to Airlie Opportunity Capital Management LP to pay down debt owed by American Metal Industries. AMI was owned by trusts set up under Hofmeister's three children, which Revstone says is not linked to the company.

The suit also alleges Hofmeister transferred $269,000 from Revstone's health-care plan toward "horse-related expenses." Hofmeister owns a 2,000-acre horse farm and mansion in Kentucky, which he unsuccessfully put on the market for $60 million in 2001.

In a separate suit filed the same day, Revstone alleges Hofmeister transferred $525,000 from the company's health care plan for personal use, including more than $15,000 to his alma mater, Ohio State University, and more than $14,000 to a horse breeder in North Carolina.

Revstone Industries filed Chapter 11 on Dec. 3, 2012, after a Grand Traverse County 13th Circuit Court judge ordered the company to pay nearly $27 million owed to its largest creditor, Clearwater, Fla.-based Boston Finance Group LLC.

Creditors in the Revstone Industries case accuse Hofmeister of shuffling assets from company to company and through several trusts to avoid paying debts.

The U.S. Department of Labor filed suit against Hofmeister and Revstone subsidiary Metavation LLC in 2012 alleging $34.6 million in prohibited loans Hofmeister made from employee pension funds to companies within the Revstone organization.

According to the suit, filed Aug. 9 in U.S. District Court, Eastern District of Kentucky, Hofmeister, on behalf of the plans, also used pension assets to buy and lease property, buy customer notes and pay adviser fees, and allocate income and expense payments between the pension funds. The suit alleges the defendants engaged in prohibited use of approximately $12.1 million from the Hillsdale Salaried Pension Plan and approximately $22.5 million from the Hillsdale Hourly Pension Plan.

The cases have unraveled elaborate layers of corporate structuring. According to various court documents by Revstone and Boston Finance, his supplier empire was organized like so: At the top are three irrevocable trusts under the names of Hofmeister's children, Megan, Scott and Jamie. In the corporate structure, the trusts own Lexington, Ky.-based Ascalon Enterprises LLC, which in turn owned the Revstone Industries holding company and the various plants and businesses under the parent.

Prior to the bankruptcy, Revstone Industries was the parent to as many as 32 subsidiaries, most of which are now shuttered or have been sold.

Former Revstone subsidiary Contech Castings LLC was to Ohio-based Shiloh Industries LLC in August for $54.4 million and former bankrupt Revstone subsidiary Metavation LLC and assets from Eptec SA de CV were sold to Troy-based Dayco Products LLC for $25.1 million in September.